New EB-5 Scandal Erupts Near Wall Street

By David North on November 11, 2021

Although the main part of the controversial EB-5 (immigrant investor) program has been dead for more than four months now, it still is generating negative attention, this time a mile or so from Wall Street.

The headline in the sprightly trade publication The Real Deal reads: “Foreign Investors demand repayment after ‘false promises’ at Pier A: $16.5M EB-5 investment in landmarked Battery Park pier vanished despite booming business: lawsuit”.

While the tale of the alien investors being allegedly scammed by U.S. resident middlemen is sadly all too common, the location is unusual. For the most part, the heavy concentration of EB-5 investments in Manhattan has not produced lawsuits like this one; such stories usually relate to failed real estate investments much further west. But this one deals with a failing restaurant along the Hudson River, perhaps no more than a mile from Wall Street.

The “duplicitous borrowers who enjoyed $15 million to $18 million in annual revenues after the rehabilitated property opened in 2014 ... [were] Peter Poulakakos and Paul Lamas of Hph Hospitality Group and Drew Spitler of the Dermot Company, the complaint alleges”, according to The Real Deal. They not only are said to have cheated the investors, they also failed to pay millions in rent to the owner of the pier (which faces the Statue of Liberty), the Battery Park City Authority.

The dispute is in a New York state court.

Incidentally, our own coverage of the continuing EB-5 controversy is linked in The Real Deal article, as well as in a recent article in Forbes.